What Does RPV Stand for and How Do You Calculate It?
RPV stands for Revenue Per Visitor, and it’s easy to calculate. For a defined time period:
RPV = Revenue ÷ Number of Visitors
RPV shows the interaction between conversion rate and average order value (AOV). Since the visitors to e-commerce sites are the common denominator of that site’s revenue generating activity, it makes sense to divide overall revenue by the number of visitors. If you’re not calculating and tracking RPV for your site, you could be missing out on valuable information that can help you monetize your site more effectively.
Relationships Among Revenue, Conversions, Average Order Value and RPV
RPV = Revenue ÷ Visitors = Conversions X (Average Order Value ÷ Visitors)
RPV = Conversion Rate X Average Order Value
Since RPV is simply a multiple of conversion rate and average order value, RPV shows you the impact of conversion rate and average order value on your revenue performance. RPV is, in other words, a primary optimization metric and one you should pay attention to when monetizing your website.
Why RPV Can Be More Informative than Conversions
While it may be intuitive to assume that more conversions equals more revenue, you have to keep in mind a few things. First, not all visitors buy the same number of products. Second, the value of products in a visitor’s shopping cart may vary quite a bit. It’s possible for your optimization strategy based solely on conversions to deliver more visitors with smaller order values, and this could ultimately raise the conversion rate while lowering revenue. When your optimization strategy is to attract more valuable visitors to your site, you raise RPV and higher RPV along with higher traffic means higher revenues.
RPV on Different Types of Websites
Different types of websites will calculate revenues differently, and therefore RPV means slightly different things to different types of websites. For retail-based sites, revenue is obvious. For advertising-based sites, revenues are revenues generated by site advertising. Marketing websites may estimate “revenue” as the total value of their leads based on how much leads have been worth in the past.
How RPV Changes Can Tip You Off to Big Problems
If you start tracking RPV, you can eventually use this metric as a sort of “canary in the coal mine” indicator. If your RPV suddenly drops off significantly, you need to look into marketing and operations to find the cause. One reason RPV can plummet is that a marketing effort has somehow attracted a large number of unqualified visitors (visitors who don’t buy anything). Another reason RPV can suddenly drop off is that there are site problems, such as your site performing slowly or your shopping cart system malfunctioning. Whenever RPV takes a big hit, it’s a strong indicator that something is wrong and you should waste no time in finding out what the problem is.
RPV is perhaps a deceptively simple metric. It’s extremely easy to calculate, yet it is a powerful indicator of the success of your site. If you haven’t been calculating and tracking RPV, you should start. As your RPV changes, you can get a better idea of what works in terms of boosting the average revenue you get per visitor, and what causes the average visitor to buy less.